US Treasuries rose on Friday, following the release of weaker-than-expected US economic data that showed an unexpected drop in July nonfarm payrolls, along with a downward revision to June's job gains. Short- and intermediate-term bonds led the rally, steepening the yield curve, as the market scaled back bets on further Federal Reserve interest rate hikes. However, gains were trimmed as oil prices recovered from earlier losses, though the yield curve remained near its steepest level of the session.

Just after 3:00 PM in New York, short-end Treasury yields were still down about 4 basis points on the day, while long-end yields fell roughly 2 basis points. Treasuries hit their session highs shortly after the nonfarm payrolls report was released, but gains narrowed as traders took profits. The yield curve remained steep, with the 2s10s spread widening nearly 3 basis points late in the session, hovering near its intraday high.

Traders lowered their expectations for Fed rate hikes at the remaining meetings this year. The market now prices in roughly 12 basis points of tightening for September and a cumulative 30 basis points of rate increases for the year, down from the 35 basis points expected at Thursday's close.

As of 3:00 PM, Treasury futures volume was about 15% above the 20-day average, while SOFR futures volume was as much as 30% above normal levels. As of 3:53 PM Eastern Time, the 2-year Treasury yield stood at 4.1931%, the 5-year yield at 4.3483%, the 10-year yield at 4.6413%, and the 30-year yield at 5.1934%. The spread between 5- and 30-year yields was 84.33 basis points, while the 2- and 10-year yield spread was 44.61 basis points.